TAXATION OF PROPERTY INCOME IN CASE OF EXPATRIATION

Taxation of property income in the event of expatriation

Property income is determined by the difference between the gross income received during the tax year and the total property expenses incurred during the same period. Property income in the event of expatriation is determined by the difference between the gross income received during the tax year and the total property expenses incurred during the same period.

You'll therefore take your work and loan interest into account when calculating your net income. The net income will then be taxed.

However, by virtue of a special provision, thetax thus calculated cannot be less than 20 % for that year of net taxable income.

However, this minimum rate of 20 % is not applicable if the taxpayer can justify that the average rate that would result from taxation in France of all his income from French and foreign sources would be lower than this minimum rate. Added to this are social security contributions.

In such cases, this average rate is used for the TAX CALCULATION payable on French-source income only.

Of course, if the individuals concerned are domiciled in a country bound to France by a tax treaty, the minimum rate of 20 % applies only to income that is effectively taxable in France under the terms of the treaty.

If you think your average tax rate is below : 

Article 197 A of the French General Tax Code stipulates that the minimum rate is not applicable to persons who can justify that the average rate which would result from the taxation in France of all their income from French and foreign sources would be lower than this minimum rate of 20%.

Where the minimum rate is not applicable, non-resident taxpayers are taxed on their French-source income at the average rate (by definition lower than the aforementioned minimum rate) which would result from taxation in France, under conditions of ordinary law, of all their income from French and foreign sources (this comes from a Tax Instruction dated September 23, 1991, 5 B-20-91; D. adm. 5 B-7123, n° 6, August 1, 2001).

Please note that this income can also be declared when you file your IRS return with the PortugalHowever, you will be entitled to a tax credit, thanks to the tax treaty between the two countries.